In the Supreme Court of the United States
UNITED STATES OF AMERICA, PETITIONER
THE MEAD CORPORATION
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
SETH P. WAXMAN
Counsel of Record
DAVID W. OGDEN
Acting Assistant Attorney General
LAWRENCE G. WALLACE
Deputy Solicitor General
KENT L. JONES
Assistant to the Solicitor General
BRUCE G. FORREST
Department of Justice
Washington, D.C. 20530-0001
1. Whether classification rulings issued by the Customs Service are entitledto deference in determining the proper tariff classification of importedgoods.
2. Whether the Customs Service reasonably interpreted the statutory phrase"diaries, notebooks and address books, bound" in Subheading 4820.10.20of the Harmonized Tariff Schedule of the United States to include the spiral-boundand ring-bound day planners imported by respondent.
In the Supreme Court of the United States
UNITED STATES OF AMERICA, PETITIONER
THE MEAD CORPORATION
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
The Solicitor General, on behalf of the United States, petitions for a writof certiorari to review the judgment of the United States Court of Appealsfor the Federal Circuit in this case.
The opinion of the court of appeals (App., infra, 1a-16a) is reported at185 F.3d 1304. The opinion of the Court of International Trade (App., infra,19a-27a) is reported at 17 F. Supp. 2d 1004. The Customs Service ruling(App., infra, 28a-47a) that applies to this case is cited as HQ No. 955937and is reported unofficially at 1994 WL 712863 (Customs).
The judgment of the court of appeals was entered on July 28, 1999. A petitionfor rehearing was denied on November 1, 1999 (App., infra, 17a). On January19, 2000, the Chief Justice extended the time for filing a petition fora writ of certiorari to March 1, 2000. The jurisdiction of this Court isinvoked under 28 U.S.C. 1254(1).
STATUTORY AND REGULATORY
1. General Note 20 of the Harmonized Tariff Schedules of the United States,19 U.S.C. 1202 (Supp. I 1995), provides in relevant part:
The Secretary of the Treasury is hereby authorized to issue rules and regulationsgoverning the admission of articles under the provisions of the tariff schedules.* * *
2. 19 U.S.C. 1502(a) provides in relevant part:
The Secretary of the Treasury shall establish and promulgate such rulesand regulations not inconsistent with the law (including regulations establishingprocedures for the issuance of binding rulings prior to the entry of themerchandise concerned), and may disseminate such information as may be necessaryto secure a just, impartial, and uniform appraisement of imported merchandiseand the classification and assessment of duties thereon at the various portsof entry. * * *
3. 19 U.S.C. 1624 provides:
In addition to the specific powers conferred by this chapter the Secretaryof the Treasury is authorized to make such rules and regulations as maybe necessary to carry out the provisions of this chapter.
4. For the period that this case involves, Subheading 4820.10.20 of theHarmonized Tariff Schedules of the United States, 19 U.S.C. 1202 (Supp.I 1995), provides a rate of duty of 3.2% for:
Diaries, notebooks and address books, bound; memorandum pads, letter padsand similar articles * * * .
5. 19 C.F.R. 177.9(a) provides in relevant part:
Effect of ruling letters generally. A ruling letter issued by the CustomsService under the provisions of this part represents the official positionof the Customs Service with respect to the particular transaction or issuedescribed therein and is binding on all Customs Service personnel in accordancewith the provisions of this section until modified or revoked. In the absenceof a change of practice or other modification or revocation which affectsthe principle of the ruling set forth in the ruling letter, that principlemay be cited as authority in the disposition of transactions involving thesame circumstances. Generally, a ruling letter is effective on the dateit is issued and may be applied to all entries which are unliquidated, orother transactions with respect to which the Customs Service has not takenfinal action on that date. * * *
6. 19 C.F.R. 177.10(a) provides in relevant part:
Generally. Within 120 days after issuing any precedential decision underthe Tariff Act of 1930, as amended, relating to any Customs transaction(prospective, current, or completed), the Customs Service shall publishthe decision in the Customs Bulletin or otherwise make it available forpublic inspection. For purposes of this paragraph a precedential decisionincludes any ruling letter, internal advice memorandum, or protest reviewdecision. * * *
This case concerns whether judicial deference is owed to the tariff classificationrulings issued by the Customs Service under 19 U.S.C. 1502(a). That statuteauthorizes the Secretary of the Treasury to adopt "rules and regulations"providing for the issuance of such "binding rulings prior to the entryof the merchandise" as may "be necessary to secure a just, impartial,and uniform appraisement of imported merchandise and the classificationand assessment of duties thereon * * * ." 19 U.S.C. 1502(a). Pursuantto that authority, the Secretary has provided for the issuance of tariffclassification rulings by the Customs Service which are "binding onall Customs Service personnel" and which, "[i]n the absence ofa change of practice or other modification or revocation which affects theprinciple of the ruling set forth in the ruling letter, * * * may be citedas authority in the disposition of transactions involving the same circumstances."19 C.F.R. 177.9(a). In addition, the Customs Service is authorized to issueclassification rulings in connection with specific merchandise already imported,19 C.F.R. 177.11(a), and to issue decisions on protests from customs classificationdeterminations, 19 U.S.C. 1515(a). The classification determinations setforth in such rulings and protest review decisions are also "precedential"in effect. 19 C.F.R. 177.10(a).
In the present case, the Federal Circuit held that these tariff classificationrulings of the Customs Service are to be given no judicial deference, andare instead to be disregarded utterly in interpreting the customs provisions.App., infra, 6a-7a. That holding warrants this Court's review.
1. Respondent imports "daily planners," which are "loose-leafbooks containing calendars, room for daily notes, telephone numbers, addressesand notepads. This sort of product is probably best known under the trademarkof Filofax." App., infra, 19a. Under Subheading 4820.10.20 of the HarmonizedTariff Schedule of the United States (HTSUS), 19 U.S.C. 1202 (Supp. I 1995),if such items are properly classified as "bound" "diaries,"they are subject to an import duty of 3.2% of their value.1 If, however,these items are not "bound" or are not "diaries," theywould then fall under Subheading 4820.10.40 of the HTSUS as "[o]ther"items for which no duty applies. App., infra, 20a-21a, 24a.
In 1993, when respondent imported its daily planners into the United States,they were classified as "bound" "diaries" to which the3.2% duty applied. Respondent filed an administrative protest of that classification.On October 21, 1994, the Customs Service issued a detailed denial of thatprotest in Headquarters Ruling (HQ) No. 955937, 1994 WL 712863 (Customs).App., infra, 28a-47a. That ruling noted that the issue presented by respondent"has been addressed in several rulings by this office" (id. at31a-32a (citing, e.g., Headquarters Ruling Letters (HRL) Nos. 955636, 1994WL 220733 (Customs Apr. 6, 1994) and 955637, 1994 WL 220734 (Customs Apr.6, 1994))):
In these rulings this office has consistently determined that articles similarin design and/or function to the instant merchandise are classifiable asdiaries. The rationale for this determination was based on lexicographicsources, as well as extrinsic evidence of how these types of articles aretreated in the trade and commerce of the United States.
The agency noted that the text of Subheading 4820.10, "the common dictionarydefinition of 'diary', and past Customs rulings" all reflect that suchdaily planners are properly "classifiable as a diary." App., infra,32a.
The Customs Service explained that the daily planners imported by respondent"fit squarely" within one of the definitions of the word "diary"contained in the Oxford English Dictionary-as "[a] book prepared forkeeping a daily record, or having spaces with printed dates for daily memorandaand jottings." App., infra, 32a-33a. The Service rejected respondent'sassertion that the agency should base its classification of such merchandisesolely on the first enumerated definition of "diary" in one dictionaryas "[a] daily record of events or transactions, a journal." Id.at 33a. The agency explained that "[m]any words have several definitionsand Customs may consider any or all of them when making a classificationdetermination." Ibid. The agency concluded that the broader definitionof the term "diary" adopted in its rulings "reflects thecommon and commercial identity of these items in the marketplace"-afact evidenced by the common usage of the term "desk diary" todescribe the imported merchandise. Id. at 34a.
Noting that customs provisions commonly incorporate prevailing commercialusages, the agency concluded that "there are many forms of 'diaries'"and that "the determinative criteria as to whether these types of articlesare deemed 'diaries' for classification purposes is whether they are primarilydesigned for use as, or primarily function as, articles for the receiptof daily notations, events and appointments." App., infra, 39a-40a.Since the daily planners imported by respondent are designed for those exactfunctions, the agency concluded that they constitute "diaries"within the meaning of HTSUS 4820.10.20. Id. at 34a, 43a.
The Customs Service further concluded that the daily planners imported byrespondent are "bound" within the meaning of the statutory classificationprovision. App., infra, 44a-47a. The agency emphasized that, in determiningwhat constitutes a "bound" "diary," the traditionalelements of formal "bookbinding" are not applicable. "Theissue is not what constitutes a bound book, and there is no requirementthat a diary be in the format of a book." Id. at 44a. Instead, theagency noted that the official explanation of the term "bound"in the notes of the Harmonized System Committee-the international authoritythat drafted this customs provision-states that the term "bound"includes "reinforcements or fittings of metal, plastics, etc."Id. at 45a. The Customs Service noted that "this language [is] indicativeof the drafters' intent to include as bound any articles possessing ringbinders or spiral binders." Ibid. The agency concluded that, "whetherring binder or spiral" binder is used, "pages held together inthis manner" are "bound" for the purposes of this customsprovision. Id. at 46a.
Since respondent's daily planners are bound in this very manner, the CustomsService ruled that these articles are "bound" "diaries"to which the 3.2% duty applied under HTSUS 4820.10.20. App., infra, 46a-47a.Respondent did not seek judicial review of that classification decision.
2. Six months later, however, respondent imported additional articles ofthe same type. The agency again ruled that these daily planners are subjectto duty as "bound" "diaries." Respondent then raisedexactly the same protest that the agency had just reviewed and rejectedin HQ No. 955937. When that protest was again denied by the agency, respondentbrought this action in the United States Court of International Trade toseek review of the agency's classification determination. App., infra, 19a.
3. The Court of International Trade has exclusive jurisdiction to reviewthe denial of a protest from a Customs Service classification decision.28 U.S.C. 1581(a). On cross-motions for summary judgment, the court upheldthe agency's determination in this case.
The court noted that respondent's daily planners were "designed fornotations concerning the full range of daily experience" and that any"supplementary material" they contain does not alter their primarycharacter as business diaries. App., infra, 25a. The court explained thatits prior decisions in Fred Baumgarten v. United States, 49 Cust. Ct. 275(1962), and Brooks Bros. v. United States, 68 Cust. Ct. 91 (1972), indicatethat when, as here, "the diary portion was the essential or indispensablepart of the importation," that is "controlling of its classification."App., infra, 22a. The court noted that the the current "tariff language"in the HSTUS was "adopted with knowledge of these judicial precedents."Id. at 23a (citing Central Prods. Co. v. United States, 936 F. Supp. 1002,1006-1007 (Ct. Int'l Trade 1996)).2
The court also upheld the conclusion of the Customs Service that respondent'sdiaries were "bound" for purposes of HTSUS 4820.10.20. The courtexplained that "[t]he common meaning of 'bound' is fastened. The irrevocabilityof the fastening is not important so long as it goes beyond the transitoryrole of packaging." App., infra, 26a.
4. The Federal Circuit has exclusive jurisdiction to review decisions ofthe Court of International Trade. 28 U.S.C. 1295(a)(5). On appeal from thedecision in this case, the Federal Circuit reversed. App., infra, 1a-16a.
a. The court of appeals first addressed whether it would afford deferenceto the classification rulings of the Customs Service in determining theproper "meaning and scope of tariff terms." App., infra, 4a. Thecourt noted that, in United States v. Haggar Apparel Co., 526 U.S. 380,391 (1999), this Court held that (App., infra, 5a):
if an HTSUS provision is ambiguous and Customs promulgates a regulationthat "fills a gap or defines a term in a way that is reasonable inlight of the legislature's revealed design," courts should give thatjudgment "controlling weight" as articulated in Chevron U.S.A.Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844 .
The Federal Circuit reasoned, however, "that Haggar, and thus Chevrondeference, does not extend to ordinary classification rulings [of the CustomsService]." Ibid. The court stated that deference is inappropriate fortariff classification rulings because those rulings are issued without thebenefit of public comment, "do not carry the force of law and are not,like regulations, intended to clarify the rights and obligations of importersbeyond the specific case under review."3 Id. at 6a. The court statedthat the "significant differences between Customs regulations and Customsrulings convince this court that Haggar's reach does not extend to standardCustoms rulings." Id. at 6a-7a.4 The court of appeals concluded thatit would therefore "continue to adhere to its [pre-Haggar] precedentgiving no deference to such rulings." Id. at 7a (citing Rollerblade,Inc. v. United States, 112 F.3d 481, 484 (Fed. Cir. 1997)).5
b. Having thus chosen simply to disregard the interpretive classificationrulings of the Customs Service, the Federal Circuit found it unnecessaryto address or consider the detailed reasoning adopted by the Customs Servicein issuing the Headquarters Rulings that apply to the facts of this case.See pages 5-7, supra. The court instead looked primarily to what it regardedas an appropriate dictionary definition of the term "diary" inthe Oxford English Dictionary and concluded that, to be a "diary,"an item of merchandise must have "relatively extensive" spacefor the recording not only "of the events themselves, but also a person'sobservations, thoughts, or feelings about them." App., infra, 12a.Giving no weight to the common commercial use of the term "diary,"the court expressed the view that a daily planner that contains "aplace to jot down the date and time" of future appointments cannotqualify as a "diary" because the very essence of a "diary"is to be "retrospective, not prospective." Id. at 12a-13a.
Applying "the above principles," the court concluded that respondent'sdaily planners are not "diaries" within the meaning of HTSUS Subheading4820.10.20 because (i) "the space provided" in those planners"would not permit a diarist to record relatively extensive notationsabout events, observations, feelings, or thoughts" and, (ii) while"[t]hese pages facilitate advance planning and scheduling[,] * * *a diary is not for planning." App., infra, 13a-14a.
c. The court of appeals further concluded that respondent's daily plannersare not "bound" within the meaning of the HSTUS 4208.10.20. Todetermine the meaning of this customs provision, the court looked to a bookpublishing industry definition of a "bound book" as a book thatis "sewn, glued, or stapled into permanent bindings." App., infra,15a. The court stated that a diary may be considered as "bound"under this book publishing definition only if a "permanent" bindinghas been employed. Ibid. Because respondents' product is "containedin ringed loose-leaf binders" that lack the "permanent" characterof a "bound book," the court held that these items are not "bound"within the meaning of the tariff provision. Id. at 15a-16a.
In reaching that conclusion, the court of appeals did not address the reasoningof the applicable Headquarters Rulings or of the authorities cited therein.In particular, the court of appeals did not acknowledge or discuss the officialinterpretive statements of the Harmonized System Committee (which draftedthese tariff provisions) which explain that the term "bound" "diaries"as used in HTSUS 4820.10.20 includes diaries that are bound with metal fittings,such as rings or spirals. See App., infra, 45a; page 7, supra.
d. The court of appeals held that, since respondents' daily planners aresimilar to, but are not, "bound" "diaries" within themeaning of this tariff provision, they are to be "classified underthe 'other' subheading of [HTSUS] 4820.10.40," for which no duty applies.App., infra, 16a. The United States filed a timely petition for rehearingwith suggestion for rehearing en banc. A response to the petition was requestedby the court from respondent. The court thereafter denied the petition withouta published vote. Id. at 17a.
REASONS FOR GRANTING THE PETITION
The decision of the court of appeals departs from the consistent decisionsof this Court and other courts of appeals that accord deference to the formalinterpretations of statutes adopted by the agencies charged with their implementation.By denying deference to the Customs Service rulings that interpret and applythe detailed classification provisions of the Tariff Act, the decision inthis case has left importers and the Customs Service without effective guidancefor a wide range of transactions. Under the decision in this case, the ultimateapplication of customs provisions often cannot be determined or even reliablypredicted except upon completion of judicial proceedings that occur wellafter the relevant transactions have been planned and conducted. By authorizingthe agency to issue, in advance, "binding rulings prior to the entryof the merchandise," 19 U.S.C. 1502(a), and to issue precedential protestreview decisions, 19 U.S.C. 1515(a), Congress sought to avoid the very uncertaintyand wasteful litigation that the decision in this case promotes.
The petition for a writ of certiorari should be granted because of the cleardeparture of the decision below from the standards of deference requiredby the decisions of this Court and because of the exceptional importanceof the questions presented to the planning of commercial transactions andto the administration of the customs laws.
1. a. It has long been a bedrock legal principle that courts are to accorddeference to the formal interpretations of a statute adopted by the agencythat has been "charged with responsibility for administering the provision"by Congress. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,467 U.S. 837, 865 (1984). See, e.g., Smiley v. Citibank (South Dakota),N.A., 517 U.S. 735, 739 (1996) ("It is our practice to defer to thereasonable judgments of agencies with regard to the meaning of ambiguousterms in statutes that they are charged with administering."); Udallv. Tallman, 380 U.S. 1, 16 (1965); McLaren v. Fleischer, 256 U.S. 477, 481(1921); Brown v. United States, 113 U.S. 568, 570-571 (1885); Edwards'sLessee v. Darby, 25 U.S. (12 Wheat.) 206, 209-210 (1827). The deferencethat this Court has consistently accorded to agency interpretations in decisionssuch as Chevron is fully applicable here.
Congress has authorized the agency to adopt such "binding rulings priorto the entry of the merchandise" as may "be necessary to securea just, impartial, and uniform appraisement of imported merchandise andthe classification and assessment of duties thereon * * * ." 19 U.S.C.1502(a). Congress has further specified that, under the "rules andregulations prescribed by the Secretary," the Customs Service is todetermine "the final appraisement of merchandise" and "fixthe final classification and rate of duty applicable to such merchandise,"19 U.S.C. 1500(a), (b), and is then to issue decisions on any protests fromsuch classification determinations, 19 U.S.C. 1515(a). In view of thesebroad delegations of authority, Congress emphasized in enacting the HarmonizedTariff Schedule of the United States in 1988 that "[t]he Customs Servicewill be responsible for interpreting and applying" this statute. H.R.Conf. Rep. No. 576, 100th Cong., 2d Sess. 549-550 (1988).
The reasoning of Chevron thus applies directly here. Courts are to deferto the agency's reasonable interpretation of the statute it administersbecause of the "presumption that Congress, when it left ambiguity ina statute meant for implementation by an agency, understood that the ambiguitywould be resolved, first and foremost, by the agency, and desired the agency(rather than the courts) to possess whatever degree of discretion the ambiguityallows." Smiley v. Citibank (South Dakota), N.A., 517 U.S. 735, 740-741(1996).
b. This Court has not limited application of this principle of judicialdeference solely to agency interpretations that are set forth in formalregulations. Instead, deference has been extended whenever the Court issatisfied that the interpretation "reflect[s] the agency's fair andconsidered judgment on the matter in question." Auer v. Robbins, 519U.S. 452, 462 (1997) (agency litigation brief). See also Reno v. Koray,515 U.S. 50, 61 (1995) (internal agency guidelines); Shalala v. GuernseyMem. Hosp. 514 U.S. 87, 99 (1995) (agency's program manual); Martin v. OccupationalSafety & Health Review Comm'n, 499 U.S. 144, 157 (1991) (agency's administrativelitigating position); Gardebring v. Jenkins, 485 U.S. 415, 429-430 (1988)(government's litigation position).
The Federal Circuit, however, has recently been reluctant to accept applicationof the judicial deference principles of Chevron to cases involving the collectionof customs duties. In a line of cases that began in dicta in Crystal ClearIndustries v. United States, 44 F.3d 1001, 1003 * (Fed. Cir. 1995), andculminated in Rollerblade, Inc. v. United States, 112 F.3d 481, 484 (Fed.Cir. 1997), the Federal Circuit has declined to give any deference to theagency's interpretations of the customs laws. This Court unanimously rejectedthose recent holdings of the Federal Circuit in United States v. HaggarApparel Co., 526 U.S. 380, 391-392 (1999). In Haggar, the Court held that,when "the agency's statutory interpretation 'fills a gap or definesa term in a way that is reasonable in light of the legislature's revealeddesign, we give [that] judgment "controlling weight."'" Id.at 392 (quoting NationsBank of North Carolina, N.A. v. Variable AnnuityLife Ins. Co., 513 U.S. 251, 257 (1995) (quoting Chevron, 467 U.S. at 844)).
In the present case, however, instead of following the directives of Chevronand Haggar, the court of appeals stated that it would "continue toadhere to its precedent giving no deference to such rulings." App.,infra, 7a (citing Rollerblade, Inc. v. United States, 112 F.3d at 484).The court stated that its refusal to follow Chevron and Haggar in the presentcase was justified by the difference "between Customs regulations [involvedin Haggar] and customs rulings [involved in this case]" (App., infra,6a). The court's holding that no deference is owed to administrative interpretationsunless they are set forth in formal regulations, however, squarely conflictswith the decisions of this Court and other courts of appeals.
For example, in NationsBank of North Carolina, N.A. v. Variable AnnuityLife Insurance Co., 513 U.S. at 257-which this Court prominently cited andquoted in Haggar, 526 U.S. at 391-392-the Court held that deference mustbe given to "an expert administrator's statutory exposition" eventhough the agency's interpretation was not set forth in any regulation orformal ruling. The Court held that, because the administrator's "constructionof the Act is reasonable," it "warrants judicial deference."513 U.S. at 254. See also Auer v. Robbins, 519 U.S. at 462; cases citedpage 15, supra.6 And, in a decision that applies directly to this case,the Court in Zenith Radio Corp. v. United States, 437 U.S. 443, 450 (1978),upheld a Treasury ruling that interpreted the countervailing duty provisionsof the Tariff Act-even though that ruling was not contained in a notice-and-commentregulation. The Court concluded that the agency's "longstanding andconsistent administrative interpretation is entitled to considerable weight"and should be sustained if it reflects a "sufficiently reasonable"elaboration of the statutory scheme. Ibid.
The Federal Circuit's determination to give no deference to the agency'sreasonable exposition of the statute in this case thus directly conflictswith Zenith Radio, as well as with Haggar and Chevron. It also conflictswith the decisions of numerous courts of appeals holding that agency interpretationsadopted by means other than formal regulations are entitled to judicialdeference. See, e.g., Auer v. Robbins, 519 U.S. at 462; Association of BituminousContractors, Inc. v. Apfel, 156 F.3d 1246, 1251-1252 (D.C. Cir. 1998); Gouldv. Shalala, 30 F.3d 714, 719-720 & n.7 (6th Cir. 1994); State of Georgia,Dep't of Med. Assistance v. Shalala, 8 F.3d 1565, 1571 n.8 (11th Cir. 1993);Coca Cola Co. v. Atchison, Topeka, & Sante Fe Ry., 608 F.2d 213, 215(5th Cir. 1979). See also Elizabeth Blackwell Health Ctr. for Women v. Knoll,61 F.3d 170, 181-182 (3d Cir. 1995) (according deference to agency policystatement), cert. denied, 516 U.S. 1093 (1996); Emerson v. Steffen, 959F.2d 119, 122 (8th Cir. 1992) (same).
The courts of appeals have described more than one standard of judicialdeference for the various types of agency interpretations that are not setforth in formal regulations. Compare, e.g., First Chicago NBD Corp. v. Commissioner,135 F.3d 457, 459 (7th Cir. 1998); Martinez v. Flowers, 164 F.3d 1257, 1260(10th Cir. 1998); Washington v. HCA Health Servs. of Texas, Inc., 152 F.3d464, 469 (5th Cir. 1998); Reich v. John Alden Life Ins. Co., 126 F.3d 1,7 (1st Cir. 1997); New York City Health & Hosps. Corp. v. Perales, 954F.2d 854, 861 (2d Cir. 1992). See also Merck & Co. v. Kessler, 80 F.3d1543, 1550 (Fed. Cir. 1996). All courts of appeals other than the FederalCircuit, however, accord either substantial weight or controlling weightto the formal rulings issued by an agency's headquarters for guidance tothe public.7 No court of appeals has joined the Federal Circuit in categoricallydisqualifying from any deference the entire body of an agency's formal interpretativerulings that are not contained in the agency's notice-and-comment regulations.8The uniquely non-deferential treatment afforded by the Federal Circuit toadministrative interpretations-arising in a court of appeals whose centralfunction is to review actions taken by federal agencies-warrants reviewby this Court.
2. Under the proper standard of deference that applies to agency interpretationsof the "statutes that they are charged with administering" (Smileyv. Citibank (South Dakota), N.A., 517 U.S. at 739), the Customs Serviceclassification ruling should have been sustained in this case. The HeadquartersRulings at issue in this case were not sparsely explained or hidden frompublic view. See App., infra, 28a-47a. To the contrary, the agency's rulingsset forth a significantly more refined, and less wooden, interpretationof the statutory language than is manifested in the decision of the courtof appeals.
The tariff classification issue in this case requires interpretation oftwo terms in Subheading 4820.10.20 of the HTSUS-"diaries" and"bound." The court of appeals refused to consider the detailedHeadquarters Rulings (HQ No. 955937 and HRL Nos. 955636, 955637) issuedby the Customs Service that have "consistently determined that articlessimilar in design and/or function to the instant merchandise are classifiableas diaries." App., infra, 31a. In these rulings, the Service has rejectedrespondent's reliance on narrowly selected dictionary definitions, notingthat "[m]any words have several definitions and Customs may considerany or all of them when making a classification determination." Id.at 33a.9 In particular, the Customs Service has explained that relianceon any single, narrow definition is inconsistent with the commercial contextin which the tariff provisions apply: business "diaries" are arecognized commercial product and this "broader concept of diary ** * reflects the common and commercial identity of these items in the marketplace."Id. at 34a.10
The Customs Service has also properly concluded that these daily plannersare "bound" for purposes of HTSUS 4820.10.20. App., infra, 44a-46a.The Customs Service disagreed with respondent's contention that a definitionof a "bound book" from the publishing industry controls in determiningwhether a "diary" is "bound" under this Subheading."The issue is not what constitutes a bound book, and there is no requirementthat a diary be in the format of a book." Id. at 44a. The Service insteadrelied on the Harmonized Commodity Description and Coding System ExplanatoryNotes- "which represent the official interpretation of the HTS at theinternational level"-which state that "goods of this heading maybe bound with materials other than paper (e.g., leather, plastics or textilematerial) and have reinforcements or fittings of metal, plastics, etc."Id. at 45a. The agency concluded that this official explanation makes it"clear that the Harmonized System Committee contemplated metal bindersas being within this heading's definition of bound articles." Ibid.The conclusion that respondent's daily planners are "bound" underthis Subheading not only comports with the official interpretation of thedrafting authority, it also makes "semantic" sense: "[A]binder, whether a ring binder or spiral, is that which binds pages togetherin a fixed order. Pages held together in this manner are bound, and thediary is therefore deemed a bound article." Id. at 46a.
The court of appeals did not suggest that the agency's thorough, well-formulatedinterpretation of the statute is not a reasonable elaboration of its provisions.Instead, the court of appeals simply displaced the agency's reasonable interpretationof the Tariff Act with another perhaps plausible interpretation of its own.See pages 5-7, 9-12, supra.11 That action by the court of appeals was inerror: "the question for the court is whether the agency's answer isbased on a permissible construction of the statute." Chevron, 467 U.S.at 843. When, as in this case, the agency's interpretation "definesa term in a way that is reasonable in light of the legislature's revealeddesign," the agency's judgment is to be given "controlling weight."Nationsbank of North Carolina, N.A. v. Variable Annuity Life Ins. Co., 513U.S. at 257.
3. The refusal of the court of appeals to defer to the agency's interpretationsof the detailed classification provisions of the Tariff Act has substantialpractical importance. The agency has routinely employed rulings, ratherthan regulations, to address application of the detailed customs provisionsto the "limitless factual variations" created by modern commerce(United States v. Correll, 389 U.S. at 307). By denying deference to theagency's interpretations of these intricate provisions, the Federal Circuithas left both importers and the Customs Service without effective guidancefor a wide range of transactions. The result of the ad hoc approach adoptedin this case is expensive customs litigation and unpredictable outcomes.
There is nothing unique about the Customs Service, or the scheme of judicialreview to which its rulings and decisions are subject, that would justifythe anomalous regime imposed by the court of appeals. Deference to the viewsof the federal officials who administer tariff legislation is not new; itdates to the beginning of the customs laws and is thus as old as the Republicitself. See Zenith Radio Corp. v. United States, 437 U.S. at 450; UnitedStates v. Vowell, 9 U.S. (5 Cranch) 368, 372 (1809). Indeed, until quiterecent times, the Federal Circuit and the Court of International Trade hadconsistently accorded deference to administrative interpretations in customslitigation. See, e.g., Guess? Inc. v. United States, 944 F.2d 855, 858 (Fed.Cir. 1991); Generra Sportswear Co. v. United States, 905 F.2d 377, 379 (Fed.Cir. 1990); Mitsui Foods, Inc. v. United States, 867 F.2d 1401, 1403 &n.3 (Fed. Cir. 1989); DAL-Tile Corp. v. United States, 829 F. Supp. 394(Ct. Int'l Trade 1993). See also Re, Litigation Before the United StatesCourt of International Trade, 19 U.S.C.A. §§ 1-1300, Cum. Ann.Pocket Part, at XI, XL-XLI (1998). The Federal Circuit's recent departurefrom this traditional standard of deference is a development that this Courtrejected in Haggar, 526 U.S. at 391-392 (citing Rollerblade, supra, withdisapproval).
Absent review by this Court, however, the decision in this case-which seeksto revive the views rejected in Haggar-will have binding effect throughoutthe Nation. That is because the Court of International Trade has exclusivejurisdiction over customs cases, and the Federal Circuit has exclusive jurisdictionover appeals from the Court of International Trade. In similar circumstances,this Court has recognized the need for plenary review of Federal Circuitdecisions of significant fiscal and administrative importance. See, e.g.,United States v. Hill, 506 U.S. 546, 549 (1993); United States v. GoodyearTire & Rubber Co., 493 U.S. 132, 138 (1989); United States v. AmericanBar Endowment, 477 U.S. 105, 109 (1986). Such review is appropriate in thiscase.
The petition for a writ of certiorari should be granted.
SETH P. WAXMAN
DAVID W. OGDEN
Acting Assistant Attorney General
LAWRENCE G. WALLACE
Deputy Solicitor General
KENT L. JONES
Assistant to the Solicitor General
BRUCE G. FORREST
1 The rate of duty on these items has been reduced since this case arose.It is currently 1.6%. HSTUS Subheading 4820.10.20, 19 U.S.C. 1202 (Supp.IV 1998).
2 The Court of International Trade did not cite or rely upon the HeadquartersRulings (HQ No. 955937 and HRL Nos. 955636 & 955637) that the CustomsService issued to respondent in resolving this same issue in 1994. See page5, supra. The court did, however, find support for its interpretation ina different Customs Service ruling, HQ No. 955199, 1994 WL 85353 (CustomsJan. 24, 1994), in which the agency explained the distinction between itemsthat are "similar" to diaries (for which a duty applies) and "other"items (for which no duty is applicable). App., infra, 24a ("The rationaleused in that ruling is persuasive * * * .").
3 In so stating, the court of appeals failed to consider or address theexpress language of the regulations which makes such rulings "bindingon all Customs Service personnel" and which specifies that "theprinciple" of the rulings "may be cited as authority in the dispositionof transactions involving the same circumstances." 19 C.F.R. 177.9(a).See also 19 C.F.R. 177.10(a) (protest review decisions are "precedential").
4 The court compared Customs Service classification rulings to IRS interpretiverulings, which the court stated have no "binding effect" on thecourts. App., infra, 7a (citing, e.g., B.F. Goodrich Co. v. United States,94 F.3d 1545, 1550 n.5 (Fed. Cir. 1996); Trainer v. United States, 800 F.2d1086, 1090 n.7 (Fed. Cir. 1986)). But see note 6, infra.
5 Under Customs Service regulations, a new interpretation that would increasethe duty from that applicable under a prior interpretation may not be adoptedwithout prior Federal Register notice and opportunity for public comment.19 C.F.R. 177.10(c). The court of appeals reserved the question whethersuch revocation decisions would be entitled to deference under Chevron.App., infra, 6a n.1.
6 The Federal Circuit manifestly erred in suggesting that deference maynot be owed to Revenue Rulings issued under the Internal Revenue Code. SeeApp., infra, 7a. In United States v. Correll, 389 U.S. 299, 302 n.10 (1967),this Court reviewed a Revenue Ruling that interpreted a provision of theCode that concerned a deduction for business expenses incurred away fromhome. The Court held that, although "[a]lternatives to the Commissioner's* * * rule are of course available," the agency's interpretation mustbe upheld when it is "reasonable" because "Congress has delegatedto the Commissioner, not to the courts, the task of prescribing 'all needfulrules and regulations for the enforcement' of the Internal Revenue Code.26 U.S.C. § 7805(a)." 389 U.S. at 306-307. The Court held in Correllthat, "[i]n this area of limitless factual variations, 'it is the provinceof Congress and the Commissioner, not the courts, to make the appropriateadjustments.'" 389 U.S. at 307 (quoting Commissioner v. Stidger, 386U.S. 287, 296 (1967)). In Davis v. United States, 495 U.S. 472, 484 (1990),the Court further explained that, while revenue rulings "do not havethe force and effect of regulations," the "agency's interpretationsand practices" are nonetheless to be given "considerable weight"when "they involve the contemporaneous construction" of the statuteor "have been in long use." Ibid. The Federal Circuit erred inignoring this longstanding precedent in stating its opposite view in thiscase.
7 For example, in Ritter v. Cecil County Office of Housing & CommunityDevelopment, 33 F.3d 323, 328 (4th Cir. 1994), the court explained that"[a]lthough less deference may be due when considering an agency'sinterpretative rules than when a federal agency adopts regulations throughthe official rulemaking process, * * * the nature of our inquiry * * * isquite similar." See also Warder v. Shalala, 149 F.3d 73, 57 (1st Cir.1998) (it is not necessary to choose between Chevron and Skidmore formulationswhen the government's interpretation prevails under either), cert. denied,119 S. Ct. 1455 (1999); Wilshire Westwood Assocs. v. Atlantic RichfieldCorp., 881 F.2d 801, 809 (9th Cir. 1989).
8 This Court has made clear that the procedure chosen by a federal agency-rulemakingversus adjudication-is a matter properly left to the discretion of the agency.See NLRB v. Bell Aerospace Co., 416 U.S. 267, 292-293 (1974); SEC v. CheneryCorp., 332 U.S. 194, 202 (1947).
9 The Customs Service correctly noted that "the narrower definitionof 'diary', as set forth in the Oxford English Dictionary's first definition,connotes an article containing blank pages used to record extensive notationsof one's daily activities. This is not the sole format for a diary."App., infra, 33a.
10 The Customs Service found additional support for this functional approachin the precedents of the former Customs Court. App., infra, 36a-40a (citingFred Baumgarten v. United States, 49 Cust. Ct. 275 (1962), and Brooks Bros.v. United States, 68 Cust. Ct. 91 (1972)).
11 In view of the fact that the court of appeals declined to consider industryusage, and failed to address the official interpretation of the tariff provisionby the international drafting authority, it could fairly be questioned whetherthe decision of the court of appeals itself bears the indicia of a "reasonable"elaboration of the statute. See page 9-12, supra.
UNITED STATES COURT OF APPEALS
THE MEAD CORPORATION, PLAINTIFF-APPELLANT
UNITED STATES, DEFENDANT-APPELLEE
July 28, 1999
Before NEWMAN, RADER, and SCHALL,
RADER, Circuit Judge.
On summary judgment, the Court of International Trade affirmed the UnitedStates Customs Service's classification of day planners imported by TheMead Corporation as bound diaries. Because the terms within subheading 4820.10.20of the Harmonized Tariff Schedules of the United States (HTSUS), namely"diaries" and "bound," do not encompass the importedarticles, this court reverses.
At issue are five models of Mead's day planners (model nos. 47192, 47062,47124, 47104, and 47102). Stylistically, the day planners differ from eachother based on their size (ranging from 7 1/2" x 4 3/8" to 12"x 10 5/8"), outer jacket cover material, and type of closure. The basicmodel contains a calendar, a section for daily notes, a section for telephonenumbers and addresses, and a notepad. The larger models contain the featuresof the basic model and additional items such as a daily planner section,plastic ruler, plastic pouch, credit card holder, and computer disketteholder. A loose-leaf ringed binder holds the contents of the day planner,except for the notepad, which fits into the rear flap of the day planner'souter cover.
In a January 11, 1993 ruling, Customs classified the subject planners asbound diaries under subheading 4820.10.20 (emphasis added):
4820 Registers, account books, notebooks, order books, receipt books, letterpads, memorandum pads, diaries and similar articles, exercise books, blottingpads, binders (looseleaf or other), folders, file covers, manifold businessforms, interleaved carbon sets and other articles of stationery, of paperor paperboard; albums for sample or for collections and book covers (includingcover boards and book jackets) of paper or paperboard:
4820.10 Registers, account books, notebooks, order books, receipt books,letter pads, memorandum pads, diaries and similar articles:
4820.10.20 Diaries, notebooks and address books, bound; memorandum pads,letter pads and similar articles
Moving for summary judgment in the trial court, Mead attacked Customs' rulingon two grounds. Mead argued that (1) the articles were not diaries, and(2) the articles were not bound. Either contention, if accepted, compelsclassification under the "other" provision of subheading 4820.10.40.Under that subheading, Mead would owe no tariff on the imported articles,in contrast with the 4.0% tariff assessed in Customs' 1993 ruling. In supportof its motion, Mead submitted dictionary definitions of the terms at issue,affidavits from seven individuals from the U.S. stationery goods industry,and affidavits from two bookbinding experts. The government cross-movedfor summary judgment in support of Customs' classification, offering itsown definitions of "diary" and "bound," and submittingsupporting affidavits.
In a July 14, 1998 opinion (No. 98-101), the trial court granted the government'smotion. The Court of International Trade broadly defined "diaries"as "articles whose principle purpose is to allow a person to make dailynotations concerning events of importance." Using that definition,the trial court decided that Mead's day planners qualify as diaries eventhough they admittedly contain "supplementary material," thatis, non-diary elements such as a section for addresses and telephone numbers.With respect to the term "bound," the trial court opined: "Thecommon meaning of 'bound' is fastened. The irrevocability of the fasteningis not important so long as it goes beyond the transitory role of packaging."Using that broad meaning for "bound," the trial court found thatMead's day planners, whose contents fit in a loose-leaf ringed binder, fallwithin that definition.
On appeal, Mead contests the trial court's definitions of "diaries"and "bound." Mead contends that "diaries" means: "Abook for recording a person's observations, thoughts and/or events."Mead further contends that an item is "bound" only when "permanentlysecured along one edge between covers in a manner traditionally performedby a bookbinder."
This court reviews the Court of International Trade's grant of summary judgmentwithout deference. See Sharp Microelecs. Tech., Inc. v. United States, 122F.3d 1446, 1449 (Fed. Cir. 1997). Where, as here, the parties do not disputematerial facts regarding the imported goods, the analysis of whether thetrial court properly classified the goods collapses into a determinationof the proper meaning and scope of the HTSUS terms. See SGI, Inc. v. UnitedStates, 122 F.3d 1468, 1471 (Fed. Cir. 1997).
The Supreme Court's recent pronouncement in United States v. Haggar ApparelCo., 526 U.S. 380, 119 S. Ct. 1392, 143 L.Ed.2d 480 (1999) has raised questionsconcerning the standard of review applicable to determinations of the meaningand scope of tariff terms. See Avenues in Leather, Inc. v. United States,178 F.3d 1241, 1999 WL 342226, at *2 (Fed. Cir. May 20, 1999). The meaningof a tariff term, a matter of statutory interpretation, is a question oflaw. See Bauerhin Tech. v. United States, 110 F.3d 774, 776 (Fed. Cir. 1997).Accordingly, this court has previously accorded Customs' classificationrulings no deference. See Rollerblade, Inc. v. United States, 112 F.3d 481,483-84 (Fed. Cir. 1997). In Haggar, however, the Supreme Court held thatif an HTSUS provision is ambiguous and Customs promulgates a regulationthat "fills a gap or defines a term in a way that is reasonable inlight of the legislature's revealed design," courts should give thatjudgment "controlling weight" as articulated in Chevron U.S.A.Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104S. Ct. 2778, 81 L.Ed.2d 694 (1984). Haggar, 119 S. Ct. at 1399. Thus thiscourt must decide whether that decision applies in this case where Customshas not issued a regulation, but has merely issued a classification rulingimplicitly interpreting an HTSUS provision. For the reasons articulatedbelow, this court determines that Haggar, and thus Chevron deference, doesnot extend to ordinary classification rulings.
The United States Code has specifically given Customs the power to promulgateregulations. See 19 U.S.C. § 1502(a) (1994). Where, as in Haggar, Customsissues a regulation under the procedural rigors dictated by the AdministrativeProcedure Act, see 5 U.S.C. § 553 (1994), that regulation has the enforceabilityof law. See Chrysler Corp. v. Brown, 441 U.S. 281, 295, 99 S. Ct. 1705,60 L.Ed.2d 208 (1979); Bernard Schwartz, Administrative Law 182-83 (3d ed.1991). A regulation, however, must first undergo a notice and comment periodduring which the interested public can "participate in the rule makingthrough submission of written data, views, or arguments." 5 U.S.C.§ 553(c). Moreover, even after promulgation, a regulation is subjectto petitions in which interested persons may seek to amend or repeal thenew policy. See 5 U.S.C. § 553(e). A regulation that endures this processcarries the full weight of Customs' rulemaking authority. See Parker v.Office of Personnel Management, 974 F.2d 164, 166 (Fed. Cir. 1992) (recognizingthat by enacting regulations, agencies put a "gloss" on theirstatutory interpretations). A regulation thus represents a reasoned andinformed articulation of Customs' statutory interpretation, which servesto "clarify the rights and obligations of importers." Haggar,119 S. Ct. at 1398.
In contrast, such procedural safeguards do not accompany typical Customsrulings.1 The process of such rulings, for example, does not involve publicdebate or discussion, but is confined to the specific facts of and partiesto the particular transaction at issue. See 19 C.F.R. § 177.0, 177.1(a)(1998). Moreover, Customs rulings do not carry the force of law and arenot, like regulations, intended to clarify the rights and obligations ofimporters beyond the specific case under review. Instead, a ruling merelyinterprets and applies Customs laws to "a specific set of facts."19 C.F.R. § 177.1(d)(1) (defining "ruling"). These significantdifferences between Customs regulations and Customs rulings convince thiscourt that Haggar's reach does not extend to standard Customs rulings. Accordingly,this court continues to adhere to its precedent giving no deference to suchrulings. See Rollerblade, 112 F.3d at 484.
In reaching this conclusion, this court also finds apt the Supreme Court'sanalogy in Haggar between trade and tax matters. See Haggar, 119 S. Ct.at 1400. The Supreme Court has decided that Treasury regulations interpretingtax statutes deserve deference. See Atlantic Mut. Ins. Co. v. Commissioner,523 U.S. 382, 389, 118 S. Ct. 1413, 140 L.Ed.2d 542 (1998) (when a termin the Internal Revenue Code is ambiguous, "the task that confrontsus is to decide, not whether the Treasury regulation represents the bestinterpretation of the statute, but whether it represents a reasonable one.");see also Schuler Indus., Inc. v. United States, 109 F.3d 753, 755 (Fed.Cir. 1997). Internal Revenue Service (IRS) interpretive rulings, in contrast,"do not have the force and effect of regulations." Commissionerv. Schleier, 515 U.S. 323, 336 n. 8, 115 S. Ct. 2159, 132 L.Ed.2d 294 (1995).Accordingly, this court has not afforded them Chevron deference. See B.F.Goodrich Co. v. United States, 94 F.3d 1545, 1550 n. 5 (Fed. Cir. 1996)("We recognize, however, that IRS Revenue Rulings have no binding effecton this court."); Trainer v. United States, 800 F.2d 1086, 1090 n.7 (Fed. Cir. 1986) (noting that "Treasury Regulations are of greaterforce and effect than Revenue Rulings.").
Customs' classifications rulings are in some ways an even less formalizedbody of interpretation than IRS revenue rulings. IRS revenue rulings, forexample, issue from a single body-the IRS's National Office-and appear inthe Internal Revenue Bulletin. See 26 C.F.R. § 601.201(6) (1998). Customs'rulings, in contrast, issue not only from Customs Headquarters, but fromeach port office of the Customs Service. See 19 C.F.R. § 177.2(b)(2)(ii)(B).Moreover, while Customs may publish its rulings in the Customs Bulletin,the regulations do not require it to do so. See 19 C.F.R. § 177.10(a).In short, the parallels between IRS Revenue Rulings and Customs rulingsfurther convince this court that the latter, like the former, do not requireChevron deference.
This court construes a tariff term according to its common and commercialmeanings, which it presumes are the same. See Simod Am. Corp. v. UnitedStates, 872 F.2d 1572, 1576 (Fed. Cir. 1989). To ascertain the common meaningof a tariff term, this court has consulted dictionaries, scientific authorities,and other reliable information sources. See C.J. Tower & Sons v. UnitedStates, 69 C.C.P.A. 128, 673 F.2d 1268, 1271 (1982).
The trial court gleaned its broad meaning of diaries from three prior cases.In Baumgarten v. United States, 49 Cust.Ct. 275, 1962 WL 10886 (1962), thecourt considered a plastic-covered book, 4 1/4 "by 7 3/8", havingpages for addresses and telephone numbers followed by ruled pages allocatedto the days of the year and the hours of the day. Calendars for the currentand following months headed the ruled pages. The importer invoiced the articlesas "desk-diaries." In classifying them as diaries rather thanas "other blank books and slate books," the court looked firstto the definition of a diary in Webster's New International Dictionary ofthe English Language (2d ed. 1951): "A register of daily events ortransactions; a daily record; journal; esp., a book for personal notes ormemoranda, or for details of experiences or observations of the writer;also, a blank book for daily memoranda." Id. at 276. From this definition,the court decided:
[T]he particular distinguishing feature of a diary is its suitability forthe receipt of daily notations. . . . By virtue of the allocation of spacesfor hourly entries during the course of each day of the year, the booksare designed for that very purpose. That the daily events to be chronicledmay also include scheduled appointments would not detract from their generalcharacter as appropriate volumes for the recording of daily memoranda.
In Brooks Brothers v. United States, 68 Cust. Ct. 91 (1972), the court consideredan "Economist Diary," a 10" by 8" spiral bound article,covered in red leather, with fine plate-finish parchment. The importer didnot dispute that the Diary was composed in part of pages suitable for useas a diary, but argued that the Diary also contained printed informationalmaterial such as maps and thus could not be classified as "Blank books,bound: Diaries." Discussing Baumgarten, the court noted: "Judicialauthority, therefore, has adopted the crux of the lexicographic definitionsthat the 'particular distinguishing feature of a diary is its suitabilityfor the receipt of daily notations.'" Brooks Brothers, 68 Cust. Ct.at 97. The court concluded that although the informational pages added tothe usefulness or value of the article, the diary portion of the EconomistDiary, "clearly 'suitable for the receipt of daily notations,'"was essential. Brooks Brothers, 68 Cust. Ct. at 97-98.
Finally, in Charles Scribner's Sons v. United States, 574 F. Supp. 1058,6 C.I.T. 168 (1983), the court classified an "Engagement Calendar,"a 9 3/8" by 6 1/2" spiral bound article with photographs on theleft side and a table of the days of the week on the right, as a calendarrather than a diary. It acknowledged the Baumgarten and Brooks Brotherscases, but decided that, in contrast to a diary which is "primarilyintended to be used in connection with extensive notations," the articleat issue was intended only "for a notation of no more than a sentenceor two." Id. at 175, 574 F. Supp. at 1063.
The trial court in this case relied heavily on these cases for its definitionof diaries. These cases, however, involved classification of goods undertariff provisions different from those presented in this case. These priorcases therefore supply only limited guidance for this case. In Charles Scribner'sSons, for instance, the court decided between classifying the articles ascalendars or diaries. Neither party to this case asserts that the day plannersshould be classified as calendars. In Baumgarten, the court classified thearticles at issue under the Tariff Act of 1930, which as then amended providedsparse guidance under Schedule 14 ("Papers and Books"):
Blank books and slate books:
Address books, diaries, and notebooks
Similarly the court in Brooks Brothers decided its case with similarly sparseguidance from the predecessor to tariff provision 4820.10.20 in the TariffSchedule of the United States (TSUS):
Schedule 2. Wood and Paper; Printed Matter
Part 4. Paper, Paperboard, and Products Thereof
Subpart C. Paper and Paperboard Cut to Size or
Shape; Articles of Paper and Paperboard
Blank books, bound:
256.56 Diaries, notebooks, and address books
Neither of these prior incarnations of the tariff schedule contain the specificityfound in the corresponding HTSUS headings. The more precise HTSUS classificationscheme, which distinguishes diaries from articles similar to diaries, necessitatesa more precise definition of the terms at issue. Stated another way, whilethe blunt dividing line used in Baumgarten and Brooks Brothers may havesufficed to distinguish diaries from other blank books, this court mustdraw the line distinguishing diaries from articles similar to diaries witha finer point.
The Oxford English Dictionary, at 612 (1989), defines a diary as: "1.A daily record of events or transactions, a journal; specifically, a dailyrecord of matters affecting the writer personally, or which come under hispersonal observation." This definition largely comports with the definitioncited in Baumgarten and with other dictionary definitions. The AmericanHeritage Dictionary of the English Language, at 516 (3d ed. 1992), for example,defines a diary as: "1. A daily record, especially a personal recordof events, experiences, and observations, a journal." See also Webster'sNew Twentieth Century Dictionary of the English Language at 504 (2d ed.1961) ("1. a daily written record, especially of the writer's own experiences,thoughts, etc."). These definitions reflect the two key aspects ofa diary.
A diary must allow its user to keep a record, especially, as the Court ofInternational Trade recognized, "concerning events of importance."Thus, a diary would include not only a factual record of the events themselves,but also a person's observations, thoughts, or feelings about them. Thiscourt disagrees with the trial court, however, that the record may be composedof the broad range of writings embraced by the term "notations."That term encompasses the use of only a word or even the briefest phrase-writingsof a length insufficient to record events, observations, thoughts, or feelings.To constitute a record at all, then, the notations must be relatively extensive.In the words of Charles Scribner's Sons, the article must have space for"more than a sentence or two." 574 F.Supp. 1058, 6 CIT at 175.
In addition, a diary must actually be a "record" in the sensethat it "recalls or relates past events." Webster's Ninth NewCollegiate Dictionary at 984 (1990) (emphasis added). A diarist recordsevents, observations, feelings, or thoughts after they happen. Thus, a diaryis retrospective, not prospective. A diary is not a place to jot down thedate and time of a distant dentist appointment, regardless of whether thatappointment would constitute an "event of importance."
Applying the above principles, the articles at issue fall into the categoryof articles similar to diaries (encompassed by "other" in subheading4820.10.40) rather than as diaries under subheading 4820.10.20. As an initialmatter, neither the trial court decision nor the government's brief identifieswhich part of the day planners they consider the diary portion. This courtassumes that the court below focused on the "daily planner" section,which all five-day planner models have in common.2 The daily planner sectionincludes a series of pages allocated to days and numbered with the hoursof the day along the left hand side of the page. Two blank lines (four shorterlines in the largest model) extend to the right of each hour. Suffice itto say that the space provided by these blank lines would not permit a diaristto record relatively extensive notations about events, observations, feelings,or thoughts. This limited space permits instead only the briefest notations.Space for only a word or phrase disqualifies these articles as diaries.
Moreover, an examination of the articles themselves reveals that the spaceprovided was not intended for recording past events. The top of each pagecarries the caption "Daily Planner" and the word "Appointments"appears above the blank lines. These pages facilitate advance planning andscheduling. As noted above, however, a diary is not for planning. Instead,a diary receives a retrospective record of events, observations, thoughts,or feelings about them. Mead markets its entire article as a "Day Planner,"further buttressing the distinction between this prospective schedulingarticle and a diary. While the importer's marketing of the goods will notdictate the classification, such evidence is relevant to the determinationand, in this case, weighs against classifying the articles as diaries. Indeed,the earlier trade cases-Baumgarten (desk- diaries); Brooks Brothers (EconomistDiary); Charles Scribner's Sons (Engagement Calendar)-turned at least inpart on the fact that the importers themselves regarded their articles eitheras diaries or as calendars. See, e.g., Brooks Brothers, 68 Cust. Ct. at98 ("[T]he Economist Diary is . . . by its own description a 'diary'").
Reasoning that the tariff provisions at issue cover a "wide varietyof book and non-book articles," the trial court eschewed the meaningof "bound" as used in the trade of book manufacturing in favorof the purported common meaning of the term. While true that heading 4820covers book and non-book articles, the term "bound" does not appearin that heading. Rather, the term appears for the first time in subheading4820.10.20 where it modifies "Diaries, notebooks and address books."These three items, the parties agree, are all books. Thus, the trial court'spremise that the provision at issue covers non-book articles falls, as doesits conclusion. Because the subheading uses the term bound in connectionwith types of books, this court looks to the common meaning of that termin that context.
The Dictionary of Publishing, at 43-44 (1982), defines the term "boundbook" as: "Books that have been cased in, usually referring tobooks that have been sewn, glued, or stapled into permanent bindings."Webster's Ninth New Collegiate Dictionary defines "bound" as "4.of a book: secured to the covers by cords, tapes, or glue." All ofthe binding methods described in these definitions are permanent bindings.Thus, this court concludes that the term "bound," when used withreference to books as in subheading 4820.10.20, means permanently securedor fastened. In addition, affidavits from bookbinding and stationery goodsexperts in the record confirmed this meaning of the term "bound"in its proper context.
The Court of International Trade's definition of "bound," in contrast,essentially renders that limitation superfluous. A "bound diary"contemplates the existence of an "unbound diary." But if "bound"means fastened regardless of the permanency, what is an "unbound diary"?At oral argument, the government argued that a stack of loose-leaf pagescould constitute an unbound diary. While such a stack would certainly beunbound, this court seriously questions whether it would qualify as a diary.The definition adopted in this opinion, however, leaves some meaning tothe class of goods known as unbound diaries, namely, those not permanentlyfastened. The day planners at issue, contained in ringed loose-leaf binders,fall squarely within that class of goods.
For the independent reasons that the subject articles are neither "diaries"nor "bound," this court reverses the trial court's classificationof the goods. The goods are properly classified under the "other"subheading of 4820.10.40.
Each party shall bear its own costs.
1 Certain rulings-specifically, those whichhave the "effect of changing a practice"-undergo notice-and-commentprocedures. 19 C.F.R. § 177.10(c) (1998). This case does not involvesuch a ruling, and this court expresses no opinion as to what level of deference,if any, would apply in that circumstance.
2 To the extent the government relies on any other portion of the day plannersnot discussed herein, this court has considered all sections and has determinedthat none qualify the article as a diary.
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
O R D E R
A petition for rehearing en banc having been filed by the APPELLEE, anda response thereto having been invited by the court and filed by the APPELLANT,and the matter having first been referred as a petition for rehearing tothe panel that heard the appeal, and thereafter the petition for rehearingen banc and response having been referred to the circuit judges who arein regular active service,
UPON CONSIDERATION THEREOF, it is
ORDERED that the petition for rehearing be, and the same hereby is, DENIEDand it is further
ORDERED that the petition for rehearing en banc be, and the same herebyis, DENIED.
The mandate of the court will issue on November 8, 1999.
FOR THE COURT,
/s/ JAN HORBALY (AV)
Dated: November 1, 1999
cc: Sidney H. Kuflik
Amy M. Rubin
Terence P. Stewart
MEAD CORP V US, 98-1569
(CIT - 95-12-01783)
UNITED STATES COURT OF
Slip. Op. 98-101
Court No. 95-12-01783
THE MEAD CORPORATION, PLAINTIFF
THE UNITED STATES, DEFENDANT
July 14, 1998
OPINION AND ORDER
WATSON, Senior Judge.
This action involves the tariff classification of imported loose-leaf bookscontaining calendars, room for daily notes, telephone numbers, addressesand notepads. This sort of product originated in England and is probablybest known under the trademark of Filofax.1
The importations were classified as bound diaries under Subheading 4820.10.20of the Harmonized Tariff Schedules of the United States ("HTSUS").That provision, in context, reads as follows:
4820 Registers, account books, notebooks, order books, receipt books, letterpads, memorandum pads, diaries and similar articles, exercise books, blottingpads, binders (looseleaf or other), folders, file covers, manifold businessforms, interleaved carbon sets and other articles of stationery, of paperor paperboard; albums for samples or for collections and book covers (includingcover boards and book jackets) of paper or paperboard:
4820.10 Registers, account books, notebooks, order books, receipt books,letter pads, memorandum pads, diaries and similar articles:
4820.10.20 Diaries, notebooks and address books, bound; memorandum pads,letter pads and similar articles . . . . . . . . . . . . . . 3.2%
4820.10.40 Other . . . . . . . . . . . Free
Mead has moved for partial summary judgment with respect to two causes ofaction, first, that the importations are not "diaries" and, second,that the importations are not "bound." A third cause of action,relating to two of the imported styles, in which the loose-leaf binder isnot riveted to the jacket cover, are not included in plaintiff's motion.The government's crossmotion covers the entire action and seeks summaryjudgment that all the importations are bound diaries as a matter of lawand were properly classified as such. The parties agree that the resolutionof this action depends on the determination of the meaning of the words"diary" and "bound" as used in the relevant subheading.
Plaintiff's first argument is that the importations are not diaries withinthe meaning of Subheading 4820.10.20. The Court notes that, if this is so,they would not be classifiable as similar to diaries under that subheadingeven though the subheading ends with the phrase "and similar articles."This is so because, unlike Subheading 4820.10, the phrase "and similararticles" in Subheading 4820.10.20 does not refer back to diaries.The semicolon in that subheading breaks it into separate units and onlymemorandum pads and notepads are the subjects of the final phrase "andsimilar articles." In other words, if the importations are similarto diaries, but not actually diaries, they would not fit into subheading4820.10.20 and plaintiff's claim would be correct.
Both parties argue that their position is supported by prior case law. However,in the opinion of the Court, the case law supports the position of the governmenton the first issue. In other words, the importations are within the tariffunderstanding of the term "diaries."
In Fred Baumgarten v. United States, 49 Cust. Ct. 275, Abstract No. 67150(1962), the importation was described as follows:
The imported article, as represented by plaintiff's exhibit 1, is a plastic-coveredbook, approximately 4 1/4 by 7 3/8 inches in dimensions. Its first few pagescontain, successively, the date "1961," the notation "PersonalMemoranda," calendars for the years 1960, 1961, and 1962, and a fewstatistical tables. The following 20-odd pages contain spaces for addressesand telephone numbers, each page more or less set aside for each letterof the alphabet. The remaining portion of the book consists of ruled pagesallocated to the days of the year and the hours of the day and each headedwith calendars for the current and following months. A blank-lined page,inserted at the end of each month's section, is captioned "Notes."
The court held that the distinguishing feature of a diary was "itssuitability for the receipt of daily notations" and found that "[b]yvirtue of the allocation of spaces for hourly entries during the courseof each day of the year, the books are designed for that very purpose."It should be noted that the presence of pages for addresses and telephonenumbers did not affect the court's conclusion in that case.
In Brooks Bros. v. United States, 68 Cust. Ct. 91, C.D. 4342 (1972) thecourt had before it an importation called the Economist Diary, a spiralbound book offered and sold as a diary with "more blank pages, usedfor recording events and appointments, than there are pages containing information."The court found that the diary portion was the essential or indispensablepart of the importation and was therefore controlling of its classification.
In Charles Scribner's Sons v. United States, 6 CIT 168, 574 F. Supp. 1058(1983) the court overturned the classification of a product as a diary underItem 256.56 of the Tariff Schedules of the United States ("TSUS")in favor of classification as a calendar under Item 274.10. The articlein question consisted of a book described as an engagement calendar forthe year 1979. The book consisted of photographs, each photograph occupyingone page and facing another page on which a calendar was devoted to theseven days of a week. The book covered fifty-three weeks in all. The courtfound that the space allocated to daily notation was "minuscule, measuringapproximately one-inch by 4 13/16 inches, and was intended for a notationof no more than a sentence or two." The court further found that theessential purpose of the book was to "convey high-quality Sierra Clubphotography in the form of a calendar."
The common thread in these cases is the understanding that "diaries"are articles whose principle purpose is to allow a person to make dailynotations concerning events of importance. Articles may be diaries evenif they contain supplementary material of a different type, such as usefulprinted information or addresses and telephone numbers. It can thereforebe fairly concluded that tariff language adopted with knowledge of thesejudicial precedents maintains the understanding inherent in those decisions.Central Products Co. v. United States, 20 CIT 862, 936 F. Supp. 1002, 1006-7(1996).
Plaintiff also argues that the diary provision in the HTSUS differs fromprior tariff provisions sufficiently to make cases decided under earliertariff laws inapplicable. Plaintiff points to the fact that the term "diary"in Item 256.56 of the TSUS was an eo nomine provision including all formsof a diary. Under the HTSUS, contends plaintiff, articles "similar"to a diary are "other" than diaries and have a separate provisionin Subheading 4820.10.40.
This line of reasoning implies that articles with special features otherthan those purely dedicated to daily notation may be similar to diaries,but not actually diaries. This argument would be persuasive if it appearedthat the provision for "other" articles similar to diaries wouldbe empty or meaningless unless articles such as these came within its ambit.But the government points out that there exists a category of merchandisemore remote from "pure" diaries than the importations but stillsufficiently close to be called "similar." Thus, in HQ 955199of January 24, 1994 (defendant's Exhibit P) the Customs Service issued bindingclassification rulings that a small diary-like book entitled "SpecialOccasion Book," devoted to making notes for "recording the name,date, occasion and gift idea for special dates" and a book called "CarCare Planner" devoted to the entry of information related to the maintenanceof a car were similar to diaries and therefor came within the scope of "other"articles under Subheading 4820.10.40. They were not actually diaries, reasonedthe ruling, because their usefulness was limited to special situations.
The rationale used in that ruling is persuasive and provides reassurancethat the residual provision for "other" articles in Subheading4820.10.40 need not be read as covering these importations out of concernthat otherwise the subheading would cover nothing at all.
As is often the case, the exhibits are potent evidence. Examination of themleads the Court to conclude that the importations are forms of diaries ratherthan articles similar to diaries. Their use for notational purposes is notconfined to a limited phase of human life or to a narrow area of activity.They are designed for notations concerning the full range of daily experience.As such, they fall within the meaning of the term "diaries" notwithstandingthe fact that they contain supplementary material.
In the second stage of this dispute, the success of plaintiff's claim dependson whether or not the diaries are "bound" within the meaning ofthe subheading in which they were classified.
On this question the plaintiff argues that the meaning of "bound"ought to be derived from the permanent form of attachment demanded of booksin Overton & Co. v. United States, 22 Treas. Dec. 437, T.D. 3237 (1912).That was a decision of the Board of General Appraisers in which GeneralAppraiser Israel F. Fischer (later to be Chief Justice of the United StatesCustoms Court in its first years ) held that permanent binding was the distinctionbetween a book and a booklet. In that decision it was held that small booksfor such purposes as the recording of weddings or the progress of a baby'sgrowth were books under paragraph 416 of the Tariff Act of 1909 rather thanbooklets under paragraph 412 because they were "firmly and permanentlystitched and bound small books, such as are the product of the bookbindersart."
In that case "booklets" were understood to be "an articleused for greeting or souvenir purposes, sold and dealt in by art dealersand stationers, and made up of several leaves or inserts flimsily fastenedwithin a folder of paper or other material."
The Court is mindful of the salutary principle that a continuity of meaningshould be maintained from one tariff act to another if Congress has notindicated otherwise. Hemscheidt Corp. v. United States, 72 F.3d 868 (Fed.Cir. 1995). However, it cannot be said that the Overton decision spoke tothe general meaning of the term "bound" as it might be used ina statute. It simply decided that the distinction between a book and bookletlay in the relative permanence of the binding. This is not the sort of judicialdecision that fixes statutory terminology so as to allow the court to reasonthat the legislators must have later used "bound" in the senseof articles that are irremovably joined to one another.
Nor can it be said that the later use of the term "bound" in theTariff Schedules of the United States or the present HTSUS was so specificallylinked to the field of book manufacture that specialized dictionary definitionsof the term or bookbinding expertise ought to apply. The tariff provisionshere under consideration cover a wide variety of book and non-book articles.Even those that are in book form are not the traditional books of the bookbindingtrade. It follows that in these circumstances, the term "bound"should be given its common meaning rather than one associated with the tradeof book manufacture. The common meaning of "bound" is fastened.The irrevocability of the fastening is not important so long as it goesbeyond the transitory role of packaging.
For the reasons given above, it is the opinion of the Court that the importationsat issue are bound diaries within the meaning of Subheading 4820.10.20 ofthe HTSUS. Consequently, defendant's motion for summary judgment will begranted.
This matter is before the court on plaintiff's partial motion for summaryjudgment, and defendant's cross-motion for summary judgment regarding thetariff classification of imported loose-leaf books.
It is hereby ORDERED that defendant's cross-motion for summary judgmentis granted and the action is hereby dismissed.
1 Filofax, Inc., importer and U.S. distributor of the "Filofax"line of products, has filed an amicus curiae brief. It did so primarilyto make the point, hereby acknowledged, that "Filofax" is a registeredtrademark, properly used only in connection with Filofax products. It isnot a generic term for the type of products involved in this case. As forthe classification issues involved herein, Filofax is pursuing its own actionswith respect to the classification of its products.
UNITED STATES CUSTOMS SERVICE
DEPARTMENT OF THE TREASURY
RE: Decision on Application for Further Review of Protest No. 4501-93-100016;classification of engagement book; organizer; day/week planner; agenda;dairy; not "similar to" a diary; 4820.10.2010, HTSUSA; Fred Baumgartenv. United States, 49 Cust. Ct. 275, Abs. 67150 (1962); Brooks Bros. v. UnitedStates, 68 Cust. Ct. 91, C.D. 4342 (1972); Charles Scribner's Sons v. UnitedStates, 574 F. Supp. 1058; 6 C.I.T. 168 (1983). HRL's 089960 (2/10/92);952691 (1/11/93); 953172 (3/19/93); 953413 (3/29/93); 955253 (11/10/93);955199 (1/24/94); 955636 (4/6/94); 955637 (4/6/94); 955516 (4/8/94).
CLA-2 CO:R:C:T 955937
October 21, 1994
TARIFF NO.: 4820.10.2010
U.S. Customs Service
4477 Woodson Road, Rm. 200
St Louis, MO 63134-3716
This is a decision on application for further review of a protest timelyfiled on March 26, 1993, by Sidney H. Kuflik of the law firm of Lamb &Lerch, on behalf of his client, the Mead Corporation, against your decisionregarding the classification of day/week planners, also referred to as organizersor agendas. Four entries of the subject merchandise were made at the portat Kansas City, Missouri, between the dates of September 3 and October 14,1992. These entries were liquidated between December 28, 1992, and January29, 1993.
Counsel for the importer raises two issues in his application for furtherreview of protest number 4501-93-100016. Counsel contends that there hasbeen a detrimental reliance by Mead on the duty-free class-ification ofits day planners under subheading 4820.10.4000, HTSUSA. Reliance was basedupon a series of three 1991 New York Ruling Letters (NYRL's). On August18, 1993, this office issued Headquarters Ruling Letter (HRL) 953690, dealingwith Mead's detrimental reliance claim. Counsel also raises substantivelegal arguments pertaining to the validity of the classification of thesearticles under subheading 4820.10.2010, HTSUSA.
Since detrimental reliance is not a matter subject to protest, we will dealwith the classification issues in this document and will respond directlyto the District Director as to how HRL 953690 impacts the four entries currentlyat issue.
A supplemental submission relating to the classification of this merchandisewas sent to this office by Mr. Kuflik on September 22, 1994.
The articles at issue are described as "day planners." The stylenumbers the subject of this protest are 47062, 47064, 47066, 47068, 47102,47103, 47104, 47105, 47106, 47107, 47122, 47124, 47126, 47128, 47130, 47132,47134, 47136, 47138, 47140, 47142, 47144, 47172, 47174, 47176, 47178 and47180. Samples of style numbers 47062 and 47104 were submitted to this officealong with generalized information about the day planners. Some of the dayplanners contain three-ring binders which are inserted into a pocket onthe inside of the jacket cover. These articles contain calendar planners,daily planners, sections designated for address/telephone information, blanknote pads, rulers, plastic business card holders and graph note pads.
Four entries of the subject merchandise were liquidated by Customs undersubheading 4820.10.2010, HTSUSA, as bound diaries, dutiable at a rate of4 percent ad valorem.
Protestant contends that the day planners are properly classifiable undersubheading 4820.10.4000, HTSUSA, and entitled to duty free entry. In supportof this contention, protestant states:
1) the day planners at issue are not diaries per se, but rather articles"similar to" diaries, and therefore classification is precludedfrom subheading 4820.10.20, HTSUSA; and
2) even if these articles are deemed to be diaries, they are not "bound"diaries and therefore classification is precluded from subheading 4820.10.20,HTSUSA.
Whether the day planners are classifiable as diaries of subheading 4820.10.20,HTSUSA, or as articles similar to diaries under subheading 4820.10.40, HTSUSA?Whether the articles at issue are considered bound?
LAW AND ANALYSIS:
Classification of merchandise under the Harmonized Tariff Schedule of theUnited States Annotated (HTSUSA) is governed by the General Rules of Interpretation(GRI's). GRI 1 provides that classification shall be determined accordingto the terms of the headings and any relative section or chapter notes,taken in order. Merchandise that cannot be classified in accordance withGRI 1 is to be classified in accordance with subsequent GRI's.
I. ARE THE DAY PLANNERS CLASSIFIABLE AS "DIARIES" OR AS ARTICLES"SIMILAR TO" DIARIES?
The determinative issue is whether the subject merchandise is classifiableas bound "diaries" under subheading 4820.10.2010, HTSUSA, or as"similar to" diaries under subheading 4820.10.4000, HTSUSA. Thisissue has been addressed in several rulings by this office. See HRL's 089960(2/10/92); 952691 (1/11/93); 953172 (3/19/93); 953413 (3/29/93); 955253(11/10/93); 955199 (1/24/94); 955636 (4/6/94); 955637 (4/6/94); and 955516(4/8/94). In these rulings this office has consistently determined thatarticles similar in design and/or function to the instant merchandise areclassifiable as diaries. The rationale for this determination was basedon lexicographic sources, as well as extrinsic evidence of how these typesof articles are treated in the trade and commerce of the United States.
In counsel's original memorandum of law in support of the Mead Corporations'protest, dated May 21, 1993, it is contended that "Customs Headquartershas at no time even remotely suggested that day planners are diaries perse." We disagree. In HRL 089960, this office unequivocally stated that"subheading 4820.10.2010, HTSUSA, provides for bound diaries and addressbooks." The holding in that ruling determined the leather agenda thenat issue to be classifiable under subheading 4820.10.2010, HTSUSA. In HRL952691, issued to the Mead Corporation, Customs held that when the "PersonalDay Planner" then at issue was examined "in light of Heading 4820,HTSUSA, the common dictionary definition of 'diary', and past Customs rulings,it appears that the item is classifiable as a bound diary . . . ."In HRL 953172, this office determined that the day planners then at issue"fall squarely within the dictionary definition of diary . . . ."This sentiment was also expressed in HRL 953413. We note that all theserulings were issued before the date of counsel's original submission oflegal arguments to Customs.
In all of the rulings cited supra, Customs held that articles synonymouslyreferred to as diaries, planners, agendas, organizers and engagement books,most of which incorporated the same or similar components as the subjectmerchandise (i.e., day/week planners, address/telephone sections, blanksections for notes), fit squarely within the definition of "diary"as set forth in the Compact Edition of the Oxford English Dictionary, 1987.That definition reads:
2. A book prepared for keeping a daily record, or having spaces with printeddates for daily memoranda and jottings; also applied to calendars containingdaily memoranda on matters of importance to people generally or to membersof a particular profession, occupation, or pursuit.
In counsel's supplementary submission to this office, dated September 22,1994, it is argued that Customs should base its classification of the subjectmerchandise solely on the first definition of "diary" presentedin the Oxford English Dictionary, which reads:
1. A daily record of events or transactions, a journal, specially, a dailyrecord of matters affecting the writer personally, or which come under hispersonal observation.
In response to this claim, we wish to stress two points. First, Customsis not obligated to limit its reliance on lexicographic sources to the firstdefinition presented for a given word. Reference to lexicographic sourcesis a means to ascertain the commonly accepted definition or definitions,for a word or term. It broadens our understanding of a word so as to arriveat a more accurate classification. Many words have several definitions andCustoms may consider any or all of them when making a classification determination.Second, we note that the narrower definition of "diary," as setforth in the Oxford English Dictionary's first definition, connotes an articlecontaining blank pages used to record extensive notations of one's dailyactivities. This is not the sole format for a diary. The word "diary"also connotes a more formal and comprehensive approach to record-keeping.
The broader concept of diary includes those articles classified in HRL's955636 and 955637, both dated April 6, 1994. In those rulings Customs determinedthat the classification of day planners as diaries reflects the common andcommercial identity of these items in the marketplace. In HRL 955636, Customsclassified day planners that were similar in function to the articles currentlyat issue. The covers of the day planners classified in HRL 955636 were conspicuouslyand indelibly printed with the legend "1994 Desk Diary." As wenoted in that ruling, it stands to reason that the publisher would not havegone to the added expense of printing "1994 Desk Diary" on thesearticles' covers, nor risked alienating potential customers, if the articleswere not indeed recognized as diaries in the marketplace. The fact remainsthat these articles must be considered a recognized form of diary if a manufacturerin the industry labels the articles as such and purposely presents themin such a manner to the consumer. This fact is pertinent in the instantanalysis because the articles marketed as diaries in HRL 955636 and theMead planners at issue are similar in material respects; both articles containday and week planners with spaces to record appointments and various notations,sections for address and telephone numbers and blank sections for notes.As the overall design and function of the HRL 955636 diaries and the Meadplanners are the same, and the former are marketed to consumers as diariesand recognized in the trade as such, it is reasonable to conclude that theMead planners are similarly deemed to be diaries in the trade and commerceof the United States.
Further evidence that day planners are treated as a form of diary in thetrade and commerce of the United States is provided by current advertisementsrun in The New Yorker magazine. The New Yorker regularly displays full-pageadvertisements for its "1994 New Yorker Desk Diary." The diarydepicted in the advertisement appears to have a similar function to theplanners under review. The advertisement's copy reads: "Since you dependon a diary every day of the year, pick the one that's perfect for you .. . Recognize what's important to you: a week at a glance, a ribbon marker,lie flat binding (spiral), lots of space to write."
In counsel's supplementary submission it is argued that the "1994 NewYorker Desk Diary" differs from the Mead planners at issue. Counselcontends that the New Yorker Desk Diary warrants classification as a diaryin that its address book and note pad section are "relatively minorand incidental elements," and that these components comprise less than10 percent of the diary's volume. Counsel submits that the Mead planneris different in that it is not marketed specifically as a diary, the addressbook and note pad components are refillable, the "non-diary" componentscost more than the diary features, and "the day planner's essentialcharacter is no longer exclusively derived from its diary function."
We address counsel's arguments in the order set forth above. First, an examinationof the New Yorker Diary reveals that it contains far more extraneous informationand components than merely an address book and note book, yet it still primarilyfunctions as a diary. As is discussed later in this ruling, this is thestandard that the Court of International Trade used to determine whetheran article was classifiable as a dairy. Second, the fact that the New YorkerDiary is labeled and marketed as a diary is persuasive evidence of the article'sidentity; however, the mere fact that an article is not specifically labeleda diary does not preclude it from classification as such. Third, we seeno relevance in the fact that the components in the Mead planners are refillable.Counsel argues that the ability to replace components is "strong indiciathat the features are not merely complementary to the diary portion of theday planner . . . ." We do not agree. The fact that certain componentsare refillable may indicate only that the outer cover of the diary is expensiveand durable enough so as to warrant use for several years, thereby necessitatingrefillable paper inserts. Lastly, the fact that the extraneous componentsin the Mead planners cost more than the pages to be used for written notationsis irrelevant. The relative cost of components is not pertinent to classificationin situations where we have a court-imposed standard which requires thata dairy's distinguishing feature be its suitability for the receipt of dailynotations. See Fred Baumgarten v. United States, 49 Cust. Ct. 275, Abs.67150 (1962). Paper inserts will invariably be the least expensive componentsof a diary. In many instances, the cost of the outer cover will be the mostexpensive component and yet the article will be classified as a diary, andnot as a binder, so long as it primarily functions as a site for the dailyrecordation of notes and appointments.
The Court of International Trade has spoken to the issue of what constitutesa diary for classification purposes. In Fred Baumgarten v. United States,the court dealt with the classification of a plastic-covered book whichwas similar in overall function to the articles currently under review.In Baumgarten, the court determined the correct classification of an articlewhich measured approximately 4-1/4 inches by 7-3/8 inches and containedpages for "Personal Memoranda," calendars for the years 1960-1962,statistical tables, and 20-odd pages set aside for telephone numbers andaddresses. The majority of the book consisted of ruled pages allocated tothe days of the year and the hours of the day. A blank lined page, insertedat the end of each month's section, was captioned "Notes." Thecourt held that this article was properly classified by Customs under item256.56, Tariff Schedules of the United States, which provided for "Blankbooks, bound: diaries," at a duty rate of 20 percent ad valorem. Inthat ruling, the court held: "the particular distinguishing featureof a diary is its suitability for the receipt of daily notations; and inthis respect, the books here in issue are well described. By virtue of theallocation of spaces for hourly entries during the course of each day ofthe year, the books are designed for that very purpose. That the daily eventsto be chronicled may also include scheduled appointments would not detractfrom their general character as appropriate volumes for the recording ofdaily memoranda." emphasis added
The Baumgarten Court's analysis and holding, if applied to the merchandiseat issue, yields a similar finding: the articles at issue are properly classifiableas bound diaries of subheading 4820.10.2010, HTSUSA, inasmuch as their distinguishingfeature is their suitability for the receipt of daily notations. As withthe articles at issue in Baumgarten, the Mead day planners contain allocatedspaces for daily and hourly entries. Moreover, these diaries contain evenmore available writing space than did the articles deemed to be diariesin Baumgarten, arguably rendering the subject merchandise even more suitablefor "the receipt of daily notations."
As stated supra, the court in Baumgarten determined that the distinguishingfeature of a diary is its suitability for the receipt of daily notations.The merchandise at issue, as is the case with most articles described asplanners, organizers, agendas, engagement books, etc., contains informationpages or interior components such as card holders, rulers and the like,which do not directly relate to the function of receiving written notations.The issue of whether the presence of extraneous material (i.e., weightsand measure charts, conversion charts, "Year-at-a-Glance" calendars,maps, telephone area codes, rulers, card holders, etc. . . .) precludesclassification as a diary was discussed in Brooks Bros. v. United States,68 Cust. Ct. 91, C.D. 4342 (1972). In that case, the court dealt with theproper classification of an article described as "The Economist Diary."The plaintiff in Brooks Bros. argued that although "The Economist Diary"was in part a diary, it contained many pages useful solely for the informationpresented and therefore was not classifiable as a bound diary, but ratheras a book consisting of printed matter or, in the alternative, a bound blankbook. The court noted: Notwithstanding plaintiff's efforts to demonstratethat the Economist Diary is not a diary but a 'book of facts,' an examinationof the diary reveals that there are more blank pages, used for recordingevents and appointments, than there are pages containing information . .. . The article is a diary which contains certain informational materialin order to render it more useful to the particular class of buyers it seeksto attract. It is to be noted that the exhibits introduced at the trial,that are conceded to be 'diaries,' also contain 'informational material,'. . . This additional material admittedly does not change their essentialcharacter as 'diaries." emphasis added
The Brooks Bros. Court concluded that "The Economist Diary" wasproperly classified by Customs as a diary and that this conclusion was "strengthenedby the fundamental principle of customs law that an eo nomine designationof an article without limitation includes all forms of that article."As subheading 4820.10.2010, HTSUSA, eo nomine provides for bound diaries,and the articles at issue fit the Oxford English Dictionary's definitionof diary, and are similar in function to the articles the courts in Baumgartenand Brooks Bros. found to be bound diaries, this office is of the opinionthat the subject merchandise is properly classifiable as bound diaries underthis subheading.
We think it imperative to recognize that there are many forms of "diaries."They may have outer covers of plastic, leather, paper or textile material.They may contain an array of components such as rulers, business card holders,pens, pencils, calculators and assorted inserts that are used either forproviding information or as a means of recording specific types of information(i.e., sections for fax numbers, car maintenance information, personal financedata, etc. . . .). As the court in Brooks Bros. noted, citing Hancock Gross,Inc. v. United States, 64 Cust. Ct. 97, C.D. 3965 (1970), "The primarydesign and function of an article controls its classification." Hence,the determinative criteria as to whether these types of articles are deemed"diaries" for classification purposes is whether they are primarilydesigned for use as, or primarily function as, articles for the receiptof daily notations, events and appointments.
In counsel's supplementary submission to this office, it is argued thatin light of a recent court decision, Nestle Refrigerated Food Company v.United States, Slip. Op. 94-118 (CIT, July 20, 1994), Customs should rethinkits approach to the classification of diaries which contain extraneous componentsunrelated to the recordation of daily notes and appointments. In Nestle,the court dealt with the issue of whether a canned tomato product containingother ingredients was classifiable as "tomatoes, whole or in the piece,"as "preparation for sauce," or as "tomato sauce." Counselsubmits that the analysis required of the court in Nestle closely mirrorsthe situation in the instant case in that we must determine whether thesubject articles, by virtue of their added extraneous elements, cease tobe diaries and have become articles "similar to" diaries. Specifically,counsel argues that the presence of the zipper pouch, ruler, business cardholder, address book and note pad serve to remove the Mead planners fromthe realm of "diary" and render them "similar to" diaries.Counsel states that these features are not "complementary to the diarydefinitional base" and "alter the essence of the article so thatthe day planners' essential character is no longer exclusively derived fromits diary function."
There are several problems with this analogy. First, the court in Nestlemerely acknowledged that optional ingredients "must serve to complement,highlight, and not overwhelm, the essential character of the tomatoes."The court further noted that, "When too much of an optional ingredientor a combination of optional ingredients are added to tomatoes . . . thetomato component is materially altered" and "the product can nolonger be deemed to be just tomatoes." The Nestle Court focused onan article's "essence." The Brooks Bros. Court found an article's"primary design and function" to be determinative of classification.These analyses are similar in the sense that if an article is primarilydesigned as, and functions as, a diary, it stands to reason that it willbe the diary component which imparts the article's "essence."
This office is of the opinion that the Brooks Bros. Court has explicitelyset forth the standard we are to apply when dealing with diaries containingextraneous components. In that case the court recognized: "The factthat the Economist Diary contained a significant quantity of printed materialdid not change its essential character . . . Regardless of the incidentalvalue or utility of its informational material, it was still primarily andessentially a diary . . . the informational material contained in the EconomistDiary merely rendered it more useful and attractive to a particular classof purchasers . . . Without the diary portion, it could not be sold as adiary of any kind." emphasis added
We disagree with counsel's position that, pursuant to the analysis set forthin Nestle, a diary's essence must be imparted "exclusively" fromits diary components to warrant classification in subheading 4820.10.2010,HTSUSA. Rather, we believe it is the Brooks Bros. analysis which is applicablein this instance: regardless of the presence of extraneous components, solong as the article is primarily a place for the recordation of events andappointments, it is classifiable as a diary. It is this office's opinionthat the Mead planners at issue have been primarily designed to performa diary function.
Lastly, we note that the decision rendered in Charles Scribner's Sons, Inc.v. United States, 574 F. Supp. 1058; C.I.T. 168 (1983), is not precedentialin the instant case in that the article at issue in that case is significantlydifferent than the articles currently the subject of this protest. At issuein Scribner's was whether an article described as the "Engagement Calendar1979" was a calendar or a diary for classification purposes under theTSUSA. The article under consideration in that case was described as a spiral-bounddesk calendar with high-quality Sierra Club photographs featured on theleft side of the opened calendar, and a table of days of the week on theright side. The article measured approximately 9-3/8 inches by 6-1/2 inchesand the space allotted for each day of the week measured approximately oneinch by 4-13/16 inches. The article was made of titanium-coated paper whichwas specifically chosen because it was best-suited for photographic reproduction.Plaintiff's witness in that case testified that although Charles Scribner'sSons, Inc. had received numerous complaints that the paper was not well-suitedfor writing, the plaintiff chose not to change the paper because the primaryobjective was to accentuate the photographs. Another witness for the plaintifftestified that the desk calendar had been marketed throughout the countryas a calendar "because it was not suitable as a diary." The suitabilitydetermination, or lack thereof, was based on the quality of paper used (asstated, it was not appropriate paper for the receipt of written notations)and the quantity of writing space available. All of the factors which precludedthe article in Scribner's from classification as a diary are absent in theinstant case. The type of paper used in these articles is well-suited forwriting and the amount of space allocated for the recordation of notes,events and appointments is presumably adequate inasmuch as it is at leastas great as that provided for in the articles held to be diaries in bothBaumgarten and Brooks Bros..
The court in Scribner's stated that as the courts in Baumgarten and BrooksBros. did not "distinguish between a diary and a calendar . . . theydo not govern the result in the present case." Similarly, this officeis of the opinion that as the issue in Scribner's was whether an articlewas a calendar or a diary, and the issue in the present case is whetherthe articles are diaries or "similar to" diaries, Scribner's isnot precedential in this instance. The courts' decisions in Baumgarten andBrooks Bros. are pertinent to our determination because those cases focusedon the specific issue of what constitutes a diary for tariff classificationpurposes. Moreover, the articles determined to be diaries in those two casesbear a strong resemblance in both form and function to the merchandise currentlyunder review.
Based on the Mead planners' suitability for the receipt of daily notations,lexicographic sources, treatment of planners in the trade and commerce ofthe United States, and prior treatment of similar articles by the Courtof International Trade, the subject planners are deemed to be "diaries"for tariff classifica tion purposes, and classifiable under subheading 4820.10.2010,HTSUSA.
II. ARE THE ARTICLES AT ISSUE "BOUND" FOR PURPOSES OF CLASSIFICATIONUNDER 4820.10.2010, HTSUSA?
The second issue before us is whether the day planners at issue are considered"bound" for purposes of classification within subheading 4820.10.2010,HTSUSA. In counsel's supplementary submission to this office, the argumentis made that the Mead planners at issue are not "bound" for purposesof classification under subheading 4820.10.2010, HTSUSA, inasmuch as theydo not meet the definition of a "bound book" as set forth in Kessler& Co. v. United States, 63 Cust. Ct. 513, C.D. 3944 (1969), citing Overton& Co. v. United States, 22 Treas. Dec. 437, T.D. 32327 (1912).
In Overton, the court defined a bound book as a "collection of leavesof any size permanently stitched or bound together in a cover, the bindingbeing of the kind of work performed by the bookbinder." Counsel submitsnumerous other lexicographic definitions from both general and trade dictionarieswhich provide similar definitions of "bookbinding," and therebyarrives at the conclusion that the Mead planners at issue are not boundin the sense contemplated by the bookbinding trade. We note that all thesubmitted definitions set forth what constitutes a bound book. The issueat hand, however, is whether diaries with metal looseleaf binders, or spiralbinders, are considered bound diaries for tariff classification purposes.The issue is not what constitutes a bound book, and there is no requirementthat a diary be in the format of a book.
The Harmonized Commodity Description and Coding System Explanatory Notes(EN) to heading 4820, page 687, which represent the official interpretationof the HTS at the international level, state: "goods of this headingmay be bound with materials other than paper (e.g., leather, plastics ortextile material) and have reinforcements or fittings of metal, plastics,etc."
It is clear that the Harmonized System Committee contemplated metal bindersas being within this heading's definition of bound articles.
Counsel contends that as the term "bound" is found for the firsttime at the eight digit level (it modifies the term "diary" insubheading 4820.10.20, HTSUSA), and the EN represent the official interpretationof the HTS only at the four and six digit level, the EN provide no instructionas to the meaning of the word "bound." While we concur that theEN need not be applied at the eight digit level, we disagree that the ENare of "no value" in this instance. The value of the EN is thatthey provide guidance and insight into the intent of the Harmonized SystemCommittee when drafting the Nomenclature. In this case, the EN specificallyset forth how articles of heading 4820, HTSUSA, may be bound. The EN statethat articles of this heading may be bound with metal. This office interpretsthis language as indicative of the drafters' intent to include as boundany articles possessing ring binders or spiral binders. This position isin accordance with the courts holding in Brooks Bros., in which an articleconstructed with a spiral binding was classified as a bound dairy underitem 256.56, Tariff Schedules of the United States Annotated (TSUSA).
We further note that the manner in which items 256.56 and 256.58 were draftedunder the TSUSA supports our position that the term "bound" wasintended to include ring binders and spiral binders. Items 256.56 and 256.58TSUSA, provide for:
Blank books, bound:
256.56 Diaries, notebooks and address books: .... 4%
256.58 Other: ...................................Free
If this office were to adopt counsel's contention, that only books boundin the traditional bookbinding method (i.e., with stitching and glue) wereto be deemed "bound," there would be no place in item 256, TSUSA,for diaries bound with ring binders and spiral binders as both the "diary"breakout and the "other" breakout are modified by the term "bound."This situation differs from the current construction of the HTSUSA, wheresubheading 4820.10.20 provides for bound diaries and 4820.10.40 is the provisionwhere unbound diaries would be classified.
Lastly, we note that a semantical approach to this issue is revealing: abinder, whether a ring binder or spiral, is that which binds pages togetherin a fixed order. Pages held together in this manner are bound, and thediary is therefore deemed a bound article.
The Mead Corporation day planners, referenced style numbers 47062, 47064,47066, 47068, 47102, 47103, 47104, 47105, 47106, 47107, 47122, 47124, 47126,47128, 47130, 47132, 47134, 47136, 47138, 47140, 47142, 47144, 47172, 47174,47176, 47178 and 47180, are classifiable under subheading 4820.10.2010,HTSUSA, which provides for, inter alia, bound diaries and address books,dutiable at a rate of 4 percent ad valorem.
Since the classification indicated above is the same as the classificationunder which the subject entries were liquidated, you are instructed to denythe protest in full.
A copy of this decision should be attached to the Form 19 and provided tothe protestant as part of the notice of action on the protest. In accordancewith Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4,1993, Subject: Revised Protest Directive, this decision should be mailedby your office to the protestant no later than 60 days from the date ofthis letter. Any reliquidation of the entry in accordance with this decisionmust be accomplished prior to the mailing of the decision.
Sixty days from the date of this decision, the Office of Regulations andRulings will take steps to make the decision available to Customs personnelvia the Customs Rulings Module in ACS and to the public via the DisketteSubscription Service, Freedom of Information Act and other public accesschannels.
John Durant, Director
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